Foreign AidForeign Aid

DEMOCRACYDEMOCRACYHelen Brosnan and Rui Hao PuahHelen Brosnan and Rui Hao Puah

ECONOMIC DEVELOPMENT AND INTERNATIONAL POLITICSECONOMIC DEVELOPMENT AND INTERNATIONAL POLITICS

INAF 100-14INAF 100-14

And

Question HYPOTHESIS Methodology Analysis CONCLUSION

• Aid reduces the probability of regime transition. Aid reduces the probability of regime transition.

• Aid in general has a negative effect on democracyAid in general has a negative effect on democracy

• Positive effect is limited to political aid and Positive effect is limited to political aid and

conditionality conditionality

• Local conditions determine the effectiveness of Local conditions determine the effectiveness of

aid for democracyaid for democracy

DOES AID HELP OR HURT DOES AID HELP OR HURT DEMOCRACY? DEMOCRACY?

Question HYPOTHESIS Methodology Analysis CONCLUSION

HypothesisHypothesis

Increases regime survival

Increases regime

longevity.

AID

Question HYPOTHESIS Methodology Analysis CONCLUSION

Operationalizing Operationalizing DEPENDENT VARIABLESDEPENDENT VARIABLES• Regime survival Regime survival

-use -use Przeworski’s (2000) DD definition

• Regime longevity Regime longevity

-use TENSYS (DPI 2010) -use TENSYS (DPI 2010)

Foreign aidForeign aid

• Net ODA given by DAC and non-DAC donors, received by 144 countries, from 1975-2004

• DAC countries are dropped

• Direct measure

-log(net ODA)

• Indirect measures

-Net ODA as a percentage of GNI

-Net ODA as a percentage of central government expense

-Log(Net ODA) / Log(population).

Question HYPOTHESIS Methodology Analysis CONCLUSION

Controlling for democracyControlling for democracy

Question HYPOTHESIS Methodology Analysis CONCLUSION

Empirical strategyEmpirical strategy

Question HYPOTHESIS Methodology Analysis CONCLUSION

• Mean and median netoda%ofgni

dictatorships (8.85%, 5.04%)

democracies (5.91%, 2.33%)

• Mean and median tensys

dictatorships (10.65, 8)

democracies (9.62, 6)

• Dictatorships last longer and receive higher netoda%ofgni than democracies

Data analysisData analysis

Question HYPOTHESIS Methodology Analysis CONCLUSION

CORRELATION OR CORRELATION OR CAUSATION?CAUSATION?

ResultsResults

ResultsResults

ConclusionConclusion

• Foreign aid does not have an effect on Foreign aid does not have an effect on regime survivalregime survival

• Foreign aid has an effect on regime Foreign aid has an effect on regime longevity.longevity.

• The effect is greater for dictatorships The effect is greater for dictatorships than democracies. than democracies.

• Our above results are robust to 4 measures of Our above results are robust to 4 measures of foreign aid and 2 definitions of democracy foreign aid and 2 definitions of democracy ((Przeworski’s DD and DPI’s EIEC)DD and DPI’s EIEC)

Question HYPOTHESIS Methodology Analysis CONCLUSION

Limitations & future Limitations & future researchresearch

• Tensys ~ DD. Controls assumed to be the Tensys ~ DD. Controls assumed to be the same. same.

• Insufficient controls for foreign aidInsufficient controls for foreign aid

• Omitted variable bias in controlling for Omitted variable bias in controlling for democracydemocracy

Question HYPOTHESIS Methodology Analysis CONCLUSION